Author

in partnership with

Morocco

Real Estate

1. Are there restrictions on foreign entities holding interests in land, and if so, how are they expressed?

Foreign individuals and the foreign entities whose share capital is held in whole or in part by foreign persons are not allowed to acquire agricultural land unless they obtain a certificate for non-agricultural purposes. The procedure to obtain such a certificate is quite long and complex as it requires review by several different authorities: the urban agency, the Wilaya (regional government office), the Investment Regional Center and other organisations.

Foreign entities can execute a lease agreement for a maximum term of 99 years to use agricultural land.

Employment

2. Are there any conditions placed on the hiring of a foreign worker (e.g. local minimum quotas which must first be met)?

There are no local minimum quotas to be met. However, in order for a foreign worker (i.e. expatriates) to be hired by a Moroccan company, a specific procedure should be followed.

The employer shall prove the absence on the national market of profiles complying with the criteria for the job. Also, a foreign worker needs to obtain the prior approval of the Ministry of Employment.

Once the foreign worker obtains the approval of the Ministry of Employment, he should ask for his residence permit.

3. What are the restrictions on redundancies and any applicable compensation?

Employees can be dismissed only through the procedure set out for wrongful misconduct or a disciplinary dismissal which is duly described in the Labour Code.

Employers should carefully follow Moroccan labour regulations in order to avoid the termination of the employment contract being treated as an unfair dismissal.

In case of unfair dismissal:

For an indefinite-term contract: the employer will have to indemnify the employee by paying (i) severance pay, (ii) damages by reason of severance, (iii) any payment in lieu of notice, and (iv) any unpaid or unused leave. The calculation of these indemnities is also regulated by the Labour Code.

For a fixed-term contract: the employer will have to pay to the employee the salary due for the period between the time of the unfair dismissal and the end of the term of the employment contract.

Investment and Local Content

4. Are there any general regulations on foreign investment, including any investment requirements for foreign companies to invest in conjunction with local entities or people, and if so, to what effect?

As a general principle, there is no legal requirement for a foreign company to invest in conjunction with a Moroccan entity or people, and there are no limits on the percentage of shares which foreigners are authorised to own in a Moroccan company.

For significant investments, Morocco has put in place an investment charter which aims to develop and promote investment in Morocco by creating tax and customs incentives (except for agricultural investment which is limited for foreigners). These incentives are confirmed through an investment convention entered into between the Moroccan government and foreign investors after the approval of the Moroccan Investment Commission.

5. Are there any specific legislative requirements, and if so, what are they?

There are no specific legislative requirements.

6. Are there any restrictions on the importation of goods or raw materials into the country, including requirements that local produce is utilised rather than products bought outside the country?

There are some restrictions on the importation of goods into Morocco, primarily aimed at weapons, explosives, military uniforms, white lead and other products which are restricted mostly in national and international legislation.

Finance

7. Are there any restrictions on the purposes for which money may be lent?

Money may not be part of the proceeds of crime and may not be used for criminal purposes or for any purpose related to, for example, money laundering, tax evasion, and activities in contravention of the exchange control requirements.

8. How does the law work in relation to security interests in this jurisdiction, and over which classes of assets may security be granted? Does your jurisdiction recognise the concept of a trust and the role of a Security Trustee?

The only way to enforce security interests over assets in Morocco is public auction (i.e. the assets will be sold to the highest bidder for cash consideration through judicial public auction).

Moroccan law provides for security interests over a broad range of assets. This includes personal security given by a third party (cautionnement), ordinary assignment of receivables, assignment of professional receivables, pledge over receivables (among which credit balance of bank accounts), pledge over shares, pledge on movable and immovable property, pledge of the ongoing business, pledge of tools and equipment, mortgages on real estate.

The concept of a trust does not exist in Morocco.

Procurement/PPPs

9. What laws, regulations and guidance are in place to manage the procurement and management of infrastructure projects (including PPPs) and is this regime overseen by a special unit, division or department (such as a PPP unit) within government?

In Morocco, the procurement and management of infrastructure projects are regulated by the following laws:

Dahir (Law) No. 1-14-192, dated 24 December 2014, promulgating Law No. 86-12 related to PPP contracts. This law is applicable to the contract whose subject is the design, development, financing, construction or rehabilitation, maintenance and/or operation of a structure or infrastructure necessary for the public service;

Law No. 1-06-15, dated 14 February 2006, promulgating Law No. 54-05 related to the public tender for management of public services. This law sets the legal framework for delegated management of public services; and

Decree No. 2-12-349, dated 20 March 2013, in relation to public procurement. This decree provides for the terms and conditions of the execution of works, deliveries of supplies or the provision of public services.

The regime of procurement and management of infrastructure is not overseen by a special unit, division or department within the government.

However, there is a Public Commission for Procurement which is a market research and consultancy body placed under the responsibility of the General Secretariat of the government.

Applications may be submitted to the Public Commission for Procurement by:

the Prime Minister;

the Secretary General of the government;

the concerned authorising officers; or

the General Controller of the commitments of expenditure.

The Public Commission for Procurement is not empowered to examine applications directly from individuals/entities, but the latter may apply to one of the abovementioned authorities who may submit the matter to the Public Commission for Procurement for its opinion. In this case, the advice given shall be transmitted to the consulting authority, which shall decide on the action to be taken.

Competition

10. Is there a merger control regime? If so, what are the thresholds for notification?

Under Law No. 104-12, dated 30 June 2014, in relation to the freedom of prices and competition (the Competition Law), any operation of concentration shall be notified to the Competition Council by the companies when one of the three conditions listed below is met:

the total worldwide turnover, excluding taxes, of all the companies or groups of individuals, entities or parties to the concentration is above MAD 750m; or

the total turnover, excluding taxes, realised in Morocco by at least two of the companies or groups of individuals or entities involved is above MAD 250m; or

the companies which are parties to the transaction, or which are the subject of the transaction, or which are economically related have performed together, during the previous calendar year, more than 40% of the sales, purchases or other transactions on a national market for goods, products or services of a similar nature or which are substitutable, or a substantial part of such market.

However, to date, the members of the Competition Council in charge of the application of the Competition Law have not yet been appointed in accordance with the provisions of the new Competition Law, and secondly the Competition Council which discharged its functions under the former Competition Law, completed its term in September 2013 and is no longer operational since this date. The concentration of operations, as defined under the former Competition Law (Law No. 1-00-225, dated 5 June 2000, promulgating Law No. 06-99 on the freedom of price and competition) continue to be notified to the Prime Minister (which office represents the competent body under the former competition law).

Notifiable operations of a business include when companies which are parties to the transaction (of merger), or which are subject to the transaction (of merger), or which are economically related, have performed together, during the previous calendar year, more than 40% of the sales, purchases or other transactions on a national market for goods, products or services of a similar nature, or which are substitutable, or on a substantial part of such market.

11. Is there a competition/antitrust law that prohibits matters such as abuse of a dominant position, cartel behaviour and exclusivity arrangements, and if so, how actively is it enforced?

The Competition Law prohibits anti-competitive practices.

However, as indicated above, Morocco is in a transition period where the Competition Council in charge of enforcing the Competition Law has not yet been appointed. Therefore, the sanctions applicable to anti-competitive practices are supposedly taken by the Prime Minister (the competent body under the former Competition Law) as the Competition Council under the former Competition Law plays an advisory role only. The sanctions under the Competition Law can be: nullity of the anticompetitive provisions; investigations; precautionary measures; injunctions; publication of the decisions; and criminal sanctions.

In practice, the procedures actioned by the Prime Minister remain limited, since any litigation procedure will fall under the competence of the courts, which are not specialised jurisdictions on competition issues. Currently, while awaiting the appointment of the Competition Council, the Prime Minister has only issued warnings to offending companies.

Intellectual Property

12. What protections does the local law provide for intellectual property rights?

Intellectual property is recognised and protected under Moroccan law. In particular, the protection of intellectual property covers patents for invention, industrial designs and models, trademarks and service marks, trade names, geographical indications and appellations of origin.

Furthermore, Law No. 97-17 on the protection of industrial property (as completed by Law No. 31-05 and Law No. 23-13) prohibits and punishes unfair competition and the fraudulent use of registered trademarks. This protection in the Moroccan territory is mainly subject to the registration of the right to be protected with the Moroccan Office of Industrial Property.

Tax and Forex

13. What taxes are businesses subject to in this jurisdiction? Please include, for example, corporate tax, VAT, stamp duty, tax on share issues, etc. and the applicable rates. What transfer pricing rules apply, and are any withholding taxes in force in your jurisdiction?

Companies doing business in Morocco may be subject to taxes, including the following:

Corporate income tax is calculated by applying the proportional rates below:

Amount of net income, less than or equal to MAD 300,000: 10%.

Amount of net income from MAD 300,001 to MAD 1,000,000: 20%.

Where the amount of net income is greater than or equal to MAD 1,000,001: 31%.

For credit institutions, insurance and reinsurance companies there is a fixed rate of 37%.

Tax incentives: companies exporting goods or services, excluding companies that export recovered metals, which produce an export turnover during the year, benefit from the amount of the said turnover, with a total exemption from corporation tax for a period of five consecutive years running from the year in which the first export transaction was made; and are then taxed at a reduced rate of 17.5% beyond this period.

Flat rate income tax: 8% of the value, excluding value-added tax on contracts regarding non-resident companies, contractors of market works, construction or assembly, having opted for the flat-rate tax. The payment of corporate tax at this rate is in full discharge of the withholding tax. When the contract involves “turnkey” delivery of a building or industrial or technical installation in a market order, the taxable basis includes the cost of the incorporated materials and the settled equipment, whether these materials and equipment are supplied by the contractor company or for its account, invoiced separately or customs cleared by the contracting authority.

10% of the amount of gross products, excluding value-added tax, collected by a non-resident physical or legal person.

20% of the amount, excluding value-added tax, of fixed income investment products.

15% of the amount of the proceeds’ shares, partnership shares and assimilated incomes.

Minimum contribution: This is the minimum amount of taxation, even in the absence of profit. The rate of the minimum contribution is 0.5% of turnover. However, the amount of the minimum contribution, even in the absence of turnover, cannot be less than MAD 3,000. Besides, companies are exempted from making the minimum contribution during the first 36 months following the date of the start of their activities (this date being indicated in their entry in the commercial register).

Professional taxes are established on the annual gross, normal and current annual rental value of shops, stores, factories, workshops, hangars, rebates, work sites, places of deposit and all locals, locations and accommodation used for taxable professional activities. For industrial establishments and any other professional activity, business tax shall be calculated on the rental value of these establishments taken as a whole and provided with all their material means of production, including goods rented or acquired by leasing without (such rental value) exceeding 3% of the cost price of the fields, buildings, fixtures, equipment and tools. Companies are exempted for the first five years of their business activity, this date being indicated in their registration in the commercial register.

Value-added tax, which is a tax on turnover, applies to activities of an industrial, commercial, and craft nature or activities in the exercise of a professional service, performed in Morocco, as well as import operations:

Normal rate fixed at 20%.

However, in order to encourage investment, the Moroccan legislator has exempted from VAT the acquisition or import of all investment goods included in the assets accounts of the companies and giving rise to a right of deduction for a period of 36 months from the start of their activity, this date being indicated in their registration in the commercial register. Also, it is exempted from VAT with the right to deduct the delivered products and services provided for export by taxpayers.

14. Are there any foreign exchange rules that control repatriation of funds out of this jurisdiction?

Morocco has a set of foreign exchange rules to control the repatriation of funds from Morocco to another country. Foreign investors are allowed to proceed with the following main forms of repatriation of funds after the fulfilment of some legal declarations: dividends, interest and principal on foreign shareholders’ loans, proceeds resulting from the sale of shares and assets or liquidation proceeds.

Dispute Resolution

15. What is the courts’ approach to enforcement of foreign judgments or arbitral awards?

Subject to certain conditions, a foreign judgment or arbitral award will be recognised and enforced by Moroccan courts following the exequatur procedure, which is followed before the competent court in the location of the defendant’s domicile or the location of performance of the judgment or arbitral award.

Among other things, such court shall ensure, before granting exequatur to:

in a foreign arbitral award, that:

the foreign arbitral award has been decided within a valid arbitration convention;

the arbitral tribunal has been validly constituted; and

the recognition or performance of the award is not contrary to public policy (ordre public);

in a foreign judgment, that:

the provisions of the judgment rendered by the foreign court is not contrary to public policy (ordre public);

the foreign court is competent; and

the procedural regularity (régularité) of the judgment rendered by the foreign court is not called into question.

16. Are the local courts generally supportive of arbitration proceedings (for example, in granting interim relief in support of such arbitrations)?

Local courts are generally supportive of arbitration proceedings. They grant interim relief if they consider that this action is legitimate and necessary.

General

17. In order for a foreign company to sign a document under local law, are there any signing procedures that must be followed?

Moroccan administration asks for “legalised” documents even though there is no legal requirement for such a request. Under Moroccan law, legalisation is required in order to officially ascertain the execution date of a document. In practice, legalisation is a process aimed at confirming that the signature on a document is genuine or attesting that a copy of a document is genuine.

When the legalisation occurs in Morocco, it will consist of going to the Mayor’s office (la Commune) and obtaining a stamp on the relevant document. The process of legalisation does not have anything to do with the content of a document.

Since 2018, when the legalisation of a document concerns a document submitted for registration before the tax administration, whether or not such registration is mandatory or optional, the agent at the Mayor’s office asks for the payment of a fee, MAD 20 per page in order to proceed with the legalisation of the document.

The legalisation process requires either the physical presence of the signatories in Morocco to sign the register of the Mayor’s office or the implementation of a legalised power of attorney allowing a representative present in Morocco to proceed with the legalisation process.

When the legalisation occurs abroad, the process of legalisation is different depending on the domicile of the party who wants to legalise the relevant document. Indeed, it could consist of going to the Moroccan Embassy in order to follow the same process as in Morocco; or in other cases, the legalisation can occur before a notary and once the document is in Morocco, the document, in some cases, has to be provided to the Foreign Affairs Ministry and stamped; or the legalisation can be performed at the town hall.

18. Are there any current legislative or policy developments that companies investing in this jurisdiction should be aware of?

Policy and legislation in Morocco is under constant change and it is necessary to review any applicable requirements at the relevant time. Generally, Morocco is aiming to develop foreign investment in Morocco and make Morocco a hub for Africa. Since 2018, some tax incentive measures have been implemented, such as the suppression of the registration rights for increases of capital and transfer of shares.

In addition, registration of Casablanca Finance City registered status can provide tax and foreign exchange incentives to eligible entities, among other things. As such, in the last few years Casablanca Finance City has become a significant gateway to Africa.